ABC Needs an Apprentice

April 20, 2004

By Ronald Grover Has the brass at Disney (DIS) been watching Donald Trump on The Apprentice? On Apr. 20, The Mouse House showed the door to Lloyd Braun and Susan Lyne, its two top program-pickers at ABC, after the TV network lost 10% of its viewers this season. Worse, ABC fell to fourth choice among the 18- to 34-year-old viewers that advertisers most crave.

The question now: Will the shakeup stop there? Disney President Robert Iger, a former ABC top banana who famously said a year back that he was "rolling up my sleeves" to help fix the network, could well be next on the spot if the network doesn't improve its operations -- and soon.

Iger & Co. have a tough task ahead of them. Barring some unforeseen calamity befalling one of the other three big networks, ABC looks to be stuck in neutral for the foreseeable future. Its most recent offering, The D.A., got fairly decent reviews, but the ratings were so poor that on a recent Saturday night it finished well behind a rerun of CBS's The District -- which itself isn't exactly the hottest show on TV.

NO SLOUCHES. Disney CEO Michael Eisner is famous for saying it takes more than one hot new show to turn around a network. He talks in terms of one strong show each "semester," an Eisnerism that seems to mean a hit at the start of the season in September and another at midseason in January. Eisner figures it will take four or five strong semesters to get his network back in the game.

The problem for ABC is that with an average of only 9 million viewers a day (vs. 13 million for CBS), it doesn't have enough viewers to generate any promotional sizzle. Michael Gallant, an analyst with CIBC world markets, projects that ABC is falling short of ratings guarantees it gave its advertisers last year, and will end up paying out some $132 million this year to advertisers in "make-goods," which are either free or cut-rate ads the rest of the year.

The two execs who Disney just let go weren't slouches by any measure. Braun and Lyne had come up with a couple of fairly successful shows. Indeed, Extreme Makeover, which launched last year, has become a bona fide hit. And the duo was quick enough to sign Jessica Simpson and her husband Nick Lachey, whose Sunday-night variety hour has enough charm to evoke a 21st century Sonny & Cher.

Other big bets, however, haven't paid off, including a remake of Dragnet last season. Same for the Tuesday-night comedy I'm With Her. The biggest problem: ABC just hasn't been able to uncork the one hot show that can jump-start the network, as Fox did with American Idol and NBC did with The Apprentice.

MISSED OPPORTUNITIES. It's no secret around Los Angeles that both Iger and Eisner, himself a one-time ABC programming exec, were heavily involved in many of the key network decisions -- especially as its precarious ratings took on added significance with Disney's increasingly restive shareholders. It was "someone upstairs" who turned down CSI, the Jerry Bruckheimer crime drama that has helped to turn around CBS's fortunes, according to one Disney insider. The Donald took Apprentice creator Mark Burnett to see ABC first, before the pair headed to NBC's Burbank headquarters.

Both CSI and The Apprentice came with financial strings that Disney's bean counters thought too stringent to generate much profit, according to sources. Yet, both shows made tons for the networks that took them -- and were ratings grabbers to boot.

The job of fighting those battles now falls to Anne Sweeney, a sweet-on-the-outside-but-tough-on-the-inside veteran who heads the unit that oversees the Disney Channel, The ABC Family Channel, and the cartoon network ToonDisney. Some believe she's among the company's best executives. Indeed, it was during her tenure at the Disney Channel that the cable outfit overhauled its programming and began to match behemoth rival Nickelodeon in ratings. Today, the Disney Channel overdraws Nick in some key younger age groups, and it has turned out such tweener hits as The Lizzy McGuire Show and That's So Raven.

Can Sweeney, with all of her talents and accomplishments, get this network clicking again? It will be a difficult task, given the loss of eyeballs. And the job won't get easier if the guys at the top -- Eisner and Iger --don't give her and her new team the leeway to make the programming decisions. At this point, ABC has no place to go but up -- or it may face another, perhaps bigger, shakeup. Grover is Los Angeles bureau chief for BusinessWeek. Follow his weekly Power Lunch column, only on BusinessWeek Online